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At-home connected fitness company Peloton (NASDAQ:PTON) has turned into one of Wall Street's favorite stocks to buy amid the novel coronavirus pandemic. This investor favoritism has led PTON stock to essentially double over the past month alone.Source: Sundry Photography / Shutterstock.com The logic ostensibly makes sense.The at-home fitness trend -- which was already fairly strong before Covid-19 -- is now gaining significant traction amid widespread gym and park closures, and "stay-at-home" orders. Peloton offers a best-in-breed, premium at-home fitness platform. Demand for this platform has presumably skyrocketed over the past month. And because Peloton is a subscription-based platform, this near-term demand surge creates long-term revenue and profit tailwinds.InvestorPlace - Stock Market News, Stock Advice & Trading TipsOverall, the coronavirus pandemic has provided a huge boost to Peloton's business. On the surface, then, the meteoric rise in PTON stock makes sense. * 9 Asian Stocks to Buy for a Post-Coronavirus Recovery Upon closer inspection, however, it doesn't. Simply consider the five following points:* The near-term demand surge may not be as big as investors seem to believe. Search interest, web traffic and app download data all imply that, while Peloton has received a demand boost amid the coronavirus pandemic, this demand boost wasn't that big, and it's fading quickly.* At-home fitness products -- especially expensive and bulky ones like the products Peloton sells -- will forever remain a niche market. When you break it down, there are simply too many sub-categories of gym-goers, fitness enthusiasts and athletes who have no need for or interest in expensive, bulky at-home bikes.* Competition in the at-home fitness market is heating up. Amid the coronavirus pandemic, at-home fitness equipment and class suppliers of all shapes and sizes have "stepped up their game", creating sizable competition headwinds for Peloton.* Margin potential may be overstated. Looking out longer-term, intense competition could dilute Peloton's long-term margin expansion potential.* Peloton stock is valued for perfection. Even in a realistic "everything goes right scenario", my modeling pegs a fair 2020 price target for PTON stock at less than $30. Not a Huge Demand SurgeThere's no arguing that Peloton has seen a surge in demand for its at-home fitness bikes amid the pandemic. Look no further than the long delivery delays on Peloton's website for proof of such.Nonetheless, other data points suggest that this demand surge is being slightly over-hyped.According to Google Trends, search interest volume related to Peloton did rise in March and April. But it rose to levels far below December search interest levels. Search interest volume has also slightly fallen since mid-March.Additionally, according to Similar Web, web traffic to onepeloton.com did bounce higher in March. Again, though, it rose to levels below what the website saw during the holiday period.Also, Peloton's app download volume surged in mid-March according to App Annie. But Peloton was still only the fifth most downloaded health and fitness app in the Apple App Store in mid-March. Since then, app download volume has steadily decreased. Today, Peloton's app ranks as the twentieth most downloaded health and fitness app.Overall, then, while the data suggests that Peloton demand is increasing, it's increasing at a rate which is underwhelming relative to the rise in PTON stock price. Niche MarketWhen you break down fitness demand into sub-categories, it becomes obvious that Peloton's at-home fitness addressable market is incredibly niche.Body-builder types don't have a need for an at-home fitness bike, let alone an expensive one. Nor do individuals whose workout routines center primarily around strength building and weights exercises.Lower-income individuals can't afford a $2,000-plus bike, on top of a $40 per month fee for fitness classes. By the same token, individuals with small living spaces can't physically fit a huge Peloton bike into their home.You also have to like workout classes in order to be willing to pay thousands of dollars for a Peloton machine and the classes. A lot of workout enthusiasts don't like classes, and also don't like bike workouts enough to pay big money for a bike-only workout platform. Many people simply like the social experience of going to the gym too much to buy a Peloton.In other words, while the market for working out is huge, the market of potential Peloton buyers is incredibly small. You're talking about upper-income households, with big enough homes, who don't rely heavily on strength workouts, who enjoy workout classes and who are willing to commit big money to a platform which allows for only bike workouts.That said, it should be no surprise that only about 15% of the gym members in Peloton's current markets are interested in Peloton products. Tons of CompetitionNot only is the at-home fitness market incredibly niche, but it's also incredibly crowded.On the low-end, pretty much every gym out there has rolled out some form of virtual workout classes during the pandemic, through either their own app or on YouTube. Those videos join a series of at-home workout videos that are already on the internet -- posted by influencers and workout enthusiasts -- which garners hundreds of thousands of views.Most of these videos are free, and the ones that do cost money don't cost $2,000. They are equipment-light, and sometimes equipment-free. They are also short, flexible, and easy-to-follow.Meanwhile, on the premium end, Peloton has competition from the likes Nautilus (NYSE:NLS) and Echelon. The former sells a broader array of at-home fitness equipment, attracting the strength-focused types. The latter sells a very similar at-home connected fitness bike as Peloton -- just at a fraction of the cost.Collectively, Peloton is one of many players in a very crowded, very small at-home fitness market. That doesn't mean Peloton won't grow. The company offers the best-in-breed, premium at-home connected fitness solutions, and will leverage that positioning to keep growing. But, it does mean that Peloton's growth potential is clouded with significant competitive risks. Overstated Margin PotentialA lot of bulls are very excited about Peloton's long-term margin expansion opportunity.That is, Peloton is a hardware and a software company. The hardware component is low margin, while the software component is high margin. As Peloton onboards more customers over the next several years, the software business will become a bigger contributor to overall revenues, driving significant gross margin expansion across the whole business.But… that gross margin expansion may be offset by limited operating leverage.Because Peloton's addressable market is so small -- and because there are multiple players in that market -- the company is going to have to spend an arm and a leg on marketing, product development and advertising to sustain customer growth and reduce customer churn. In turn, such big operating expense spend will limit how the company benefits from economies of scale. In plain English, that means that Peloton's expense rate may not drop as rapidly as many hope it will.This lack of expense rate compression will offset gross margin expansion, and ultimately dilute Peloton's long-term margin expansion potential. Overvalued Peloton StockHaving said all that, Peloton is still a growth company. The company has good revenue and profit growth prospects over the next few years as the at-home fitness market gains momentum, and as Peloton leverages its premium-end leadership in that market to significantly expand its customer base.The problem, though, is that PTON stock is already priced for all of that… and then some.My long-term model on Peloton makes some aggressive assumptions. Approximately 2,700% subscriber growth to 14 million subs by 2030, and more than 1,000% revenue growth to over $10 billion in revenues by then. About 20 points of gross margin expansion to over 60%, and roughly 20% adjusted operating profit margins by then, too.However, under those aggressive assumptions, my model suggests that Peloton will do "just" $4 in earnings per share by 2030. So based on a 16-times forward earnings multiple and a 10% annual discount rate, that implies a 2020 price target for PTON stock of less than $30. Bottom Line on PTON StockPeloton is a growth company, with good long-term growth prospects. But, at present, PTON stock is being valued as if Peloton is a great company, with great long-term growth prospects.This discrepancy is a byproduct of the coronavirus pandemic. And once the pandemic passes, I expect this discrepancy to fade, too. When it does, PTON stock will likely drop below $30.Luke Lango is a Markets Analyst for InvestorPlace. He has been professionally analyzing stocks for several years, previously working at various hedge funds and currently running his own investment fund in San Diego. A Caltech graduate, Luke has consistently been rated one of the world's top stock pickers by various other analysts and platforms, and has developed a reputation for leveraging his technology background to identify growth stocks that deliver outstanding returns. Luke is also the founder of Fantastic, a social discovery company backed by an LA-based internet venture firm. As of this writing, he did not hold a position in any of the aforementioned securities. More From InvestorPlace * America's 1 Stock Picker Reveals Next 1,000% Winner * 25 Stocks You Should Sell Immediately * 1 Under-the-Radar 5G Stock to Buy Now * The 1 Stock All Retirees Must Own The post 5 Big Reasons to Sell Peloton Stock Above $35 appeared first on InvestorPlace.

Shares of Nautilus, Inc. , surged in after-hours trading after the company offered an upbeat forecast for its first-quarter results, saying sales of its exercise equipment are surging because so many people are being forced to stay at home to slow the spread of coronavirus. The company said preliminary net sales for the first quarter were $94 million, up 11% from the year-earlier period, the first time quarterly sales have risen since the third quarter of 2018.

Nautilus Inc on Wednesday forecast higher sales for the first quarter, as the coronavirus-driven stay-at-home boosted demand for its exercise equipment. Shares of the company, which competes with Peloton Interactive Inc, surged 30% in extended trading. Nautilus said it expects first-quarter net sales to rise 11% from a year earlier to $94 million, the first increase in more than a year, as people turn to at-home exercise equipment because of restrictions on movement.

Portland-area voters will decide in May if wealthier residents and businesses will pay a new $250 million tax for serving the city's homeless population. The Metro Council on Tuesday approved sending the measure to the primary ballot. It would create a 1 percent income tax for individuals making more than $125,000, couples earning more than $200,000 and larger businesses with more than $5 million in gross receipts.

While large public companies such as Expedia and T-Mobile have yet to name their next CEO, dozens of companies in the Puget Sound region welcomed new leadership in 2019. Eric Artz, who had been REI's chief operating officer, was named CEO of the co-op after the departure of Jerry Stritzke. Stan Deal took over as CEO of Boeing Commercial Airplanes, moving from Boeing Co.'s Global Services division.

One of the most difficult things for an investor to learn is when they have stocks to sell. That's because it's in our nature to look for the rags-to-riches story. Plus, let's face it -- on more than one occasion, a stock that was left for dead has rebounded to reach new heights.However, the reality is that in just as many cases, stocks that are falling will continue to fall. And while this doesn't mean a stock can't turn around, it often times means that the stock may have further to fall.How can investors tell the difference? An easy clue for investors to follow is to look at what analysts say about a stock. Analysts are typically assigned to a handful of specific stocks, or they may cover specific sectors. That means they will frequently have contacts within the companies that involve those stocks, which helps them understand the fundamentals of a company.InvestorPlace - Stock Market News, Stock Advice & Trading TipsAn analyst's recommendation is particularly important whenever a stock issues its periodic earnings report. That's because, in addition to companies posting the results of the quarter just passed, they offer guidance for future results. After analyzing all this information, they issue a buy, hold or sell rating. Although the ratings seem straightforward, many investors know that hold has actually come to mean sell. So, when a stock gets a sell rating, it means analysts have a particularly negative impression of a stock. * 7 Vaping Stocks to Get into Ahead of the Crowd The moral of the story, when a stock gets a sell rating, it's important to get out before further damage is done to your portfolio. With that being said, take a look at these three stocks to sell and consider kissing them goodbye before we enter 2020. Stocks to Sell Before 2020: Nio (NIO)Source: THINK A / Shutterstock.com Year-to-Date Performance: -58%In a prior article, I said that the electric car industry is similar to the cannabis sector in that there will be some companies that will be first through the door, but won't be there when the industry consolidation is finished. That may very well be the case with Nio (NYSE:NIO) stock.Nio has been given the nickname "Tesla (NASDAQ:TSLA) of China," but has a lot of obstacles that are getting in the way of their growth. One of those obstacles is that the company has yet to turn a profit -- and the path to profit does not look very clear. The upper class in China is not as robust as many think. This is creating a supply and demand problem that is hard to ignore.Furthermore, the Chinese government has removed the subsidies from electric cars -- which is creating even more of a demand problem.Nio also doesn't manufacture its own product, which makes it difficult to get a true valuation of the company. Nautilus (NLS)Source: Shutterstock YTD Performance: -84%It's hard to imagine that investors would be questioning a fitness company's stock; Nonetheless, that's the case with Nautilus (NYSE:NLS). The stock is down over 80% in 2019, and reported an earnings per share (EPS) loss of 36 cents. This was 32 cents worse than analysts' estimates this past quarter. This made it three-straight quarters that the company reported a negative EPS -- and that's not an encouraging trend.However, what makes the situation worse is that Nautilus is struggling to perform in its key Bowflex business. The company blamed a slow start to the year on advertising that failed to get across the company's new digital benefits. * 5 Retail Stocks That Are Winning Big This Holiday Season But, in a fitness space that is getting more crowded by the day, it's simply not credible to believe that the problem with the company's Bowflex business is due to poor advertising. Especially when a brand like Peloton (NASDAQ:PTON) is showing that even negative publicity can be good publicity. J.Jill (JILL)Source: Susan Montgomery / Shutterstock.com YTD Performance: -82%As I mentioned in the introduction, when analysts give a hold rating, it frequently means it's time to sell the stock. So, when five of the nine analysts that offered ratings on J.Jill (NYSE:JILL) gave the stock a "hold" rating, that can't be good news.One of the problems that bedevil J.Jill is its inability to deliver consistently positive earnings. The company managed to break a four-quarter streak of declining earnings in the first quarter of 2019. However, the stock quickly reported a decline in earnings in the second quarter -- and not just a decline, JILL's stock actually reported negative earnings. They broke the string in the third quarter, ticking back to positive and only missing analysts' expectations by 4 cents; But, a miss is still a miss. Furthermore, the company's fourth-quarter guidance is also showing another decline in earnings.For a stock that's already down 82% for the year, that kind of performance is not going to inspire investors. This is particularly true when the company cites one of the reasons for its poor sales number in the first quarter as a shift from catalog to digital sales that was too aggressive. It's hard to imagine that such a thing is possible.As of this writing, Chris Markoch did not have a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Vaping Stocks to Get into Ahead of the Crowd * 5 Retail Stocks That Are Winning Big This Holiday Season * Make the Shift Toward Value Stocks With These 5 Picks The post 3 Stocks to Sell and Kiss Goodbye Before the New Year appeared first on InvestorPlace.

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts, usually don't make them change their opinion towards a company. This time it may be different. During the fourth quarter of 2018 we observed increased volatility and a 20% drop in […]

It's been a good year for IPO stocks.The first eight months of 2019 have seen 107 IPOs priced, down about 20% from the same period last year. However, the total proceeds raised add up to $42.5 billion, 23% higher than in the first eight months of 2018.For example, SmileDirectClub, the company that provides in-home teeth straightening at a fraction of the cost, filed its preliminary prospectus Sept. 3. It expects to raise up to $1.3 billion in its IPO selling 58.5 million shares at between $19 and $22 a share, valuing the company at a jaw-dropping $3.2 billion. InvestorPlace - Stock Market News, Stock Advice & Trading TipsGenerally, it's been a seller's market, so you would think there wouldn't be any stinkers. Think again. * 7 Stocks to Buy In a Flat Market Despite a relatively healthy IPO market that's produced an average return of 33% year-to-date through Sept. 3, almost double the S&P 500, several IPOs have wet the bed. Here are what I believe are seven of the worst IPOs in 2019. The Worst IPO Stocks: The We Company (WE)Source: Mitch Hutchinson / Shutterstock.com The first of my worst IPO stocks in 2019 is The We Company, the holding company for office co-working giant WeWork, which currently has 528 locations in 111 cities across 29 countries. Its growth since opening its first location in New York City in early 2010 is mind-boggling. That's the good news. The bad news is that WeWork may never make money. "On the key question of future profitability, it is impossible to tell if WeWork's costs will continue to be double its revenues, or if the per-unit trends justify additional investment," wrote Financial Times contributor Rett Wallace Sept. 3. "Investors relying on the prospectus may have trouble telling what gets more elevated, their consciousness or their blood pressure."WeWork has yet to price its shares, but the cynicism facing this IPO suggests it will be nearly impossible for it to come out of the gate with a positive first-day return. In addition to the fact it loses money, has a nosebleed valuation and relies heavily on CEO and founder Adam Neumann, is the presence of a three-class share structure that will make it virtually impossible for institutional investors to exert any pressure on the company should it continue to lose money for an extended period. While it's not uncommon for tech companies to have a dual-class share structure in place to ensure the founder can maintain a long-term vision, a three-class share structure takes the cake. It hasn't gone public yet and already it has to be considered one of the worst IPOs of 2019. Peloton (PTON)Source: Sundry Photography / Shutterstock.com Peloton, which filed its preliminary prospectus Aug. 28, considers itself to be a technology company that happens to sell interactive fitness machines.In addition to being a technology company, it believes itself to be a media company, an interactive software company, a product design company, a social connection company, an omni-channel retail company, an apparel company and a logistics company. That's like RCI Hospitality Holdings (NASDAQ:RICK), which operates a chain of strip clubs under the name Rick's Cabaret, calling itself a tech company, because, in addition to operating nightclubs, it also operates more than a dozen websites.In a nutshell, Peloton is a company that sells fitness bikes and treadmills between $2,245 and $4.295. Also, it streams classes for these machines for a monthly subscription of $39. In fiscal 2019, it generated $719 million in revenue from the sale of fitness products and $181 million in sales from monthly subscriptions. Including $14.7 million in other revenue, fitness product sales have gone from 84% of its total revenue in fiscal 2017, to 79% in the past year with most of the gains from its monthly subscriptions.Its gross profit margin for fitness products and the monthly subscriptions are 42.9% and 42.7% respectively. However, much like Wayfair (NYSE:W), it has to spend a boatload on marketing to attract and retain customers. As a result of these acquisition costs, Peloton lost $195.6 million before tax in 2019, almost three times what it lost in 2017. * 7 Deeply Discounted Energy Stocks to Buy Just have a look at Nautilus (NYSE:NLS) to understand the risks of investing in fitness equipment. You're far better to invest in Apple (NASDAQ:AAPL) and ride its growth in wearables. Peloton is most likely going to be a dud. Luckin Coffee (LK)Source: Keitma / Shutterstock.com Luckin Coffee (NASDAQ:LK) is China's fastest-growing coffee chain in terms of the number of stores open and cups of coffee sold. It went public May 16 at $17 a share, generating a 19.9% first-day return. Since then, LK stock has gone sideways. They say that you can often pick up an IPO stock for less than its initial pricing within 12-24 months. I have no doubt Luckin is in that category. It's been terribly over-hyped. In mid-August, Luckin reported its first earnings report as a public company. Its results were much worse than expected, sending its stock down by more than 15%.How bad were its second-quarter 2019 results?Luckin was expected to lose 43 cents per share. It lost 48 cents or $49.6 million on $132.4 million in revenue. That means it loses 37 cents for every dollar in sales. In April, Starbucks (NASDAQ:SBUX) CEO Kevin Johnson called Luckin's heavy discounting "unsustainable."Furthermore, while Luckin has only been in business for two years in China, Starbucks has been operating there for the past 20 years and has almost 4,000 stores. As Starbucks plays the long game in China, it has both the experience and financial wherewithal to wait out Luckin. Luckin's IPO is an example of how alluring China is to North American investors. Eventually, that's going to come back to haunt them. Wanda Sports Group (WSG)Source: Juan Carlos Alonso Lopez / Shutterstock.com If you're a triathlete, you've probably familiar with China-based Wanda Sports Group (NASDAQ:WSG), a global sports events, media and marketing platform that owns the Ironman triathlon brand.In late July, WSG went public at $8 a share, raising $190 million by selling 23.8 million shares of its stock. Its stock lost 35.5% on its first day of trading and it's flatlined ever since. WSG is a spinoff of Dalian Wanda Group, the privately held holding company of Chinese billionaire Wang Jianlin, who also owns a controlling interest in AMC Entertainment (NYSE:AMC). Jianlin initially thought Wanda Sports could raise more than $500 million from its IPO. Unfortunately, WSG went public below its IPO target price of $9-$11. Chinese IPOs, in general, have done poorly in 2019. As of the end of July, 11 of the 18 Chinese IPOs this year were trading below their IPO price. WSG is one of those 11. * 7 Best Tech Stocks to Buy Right Now Unlike many IPOs in 2019, Wanda Sports makes money. In 2018, it earned $61.9 million in net income from $1.3 billion in revenue. That's a net margin of just 4.8%, not much better than a grocery store chain. If you are a triathlon athlete, it's probably better to invest in yourself and not the owners of the Ironman. You'll be better for it. Greenlane Holdings (GNLN)Source: Shutterstock Greenlane Holdings (NASDAQ:GNLN) is a leading distributor of vaporization products and consumption accessories in the U.S. and Canada. Its biggest claim to fame is that it distributes Juul and Pax vape pens, two of the biggest manufacturers of vaporizers in the world. That was enough to sell 6 million shares of its stock in April at $17 a share, above the high-end of its pre-IPO pricing. As a result, its stock gained 24% in its first day of trading. However, since then, it's fallen to just under $6, prompting the threat of class-action lawsuits by lawyers across the country who believe the company made several untrue statements in its IPO prospectus. In its Q2 2019 earnings report, Greenlane reported $102.9 million in revenue and a net loss of $21.0 million. On an adjusted basis, it lost $2.6 million in the first six months of the year, a significant decline from a $3.1 million gain a year earlier. On Aug. 8, Greenlane announced that it had signed a deal with Canopy Growth (NYSE:CGC) to be the exclusive distributor of the cannabis company's Storz & Bickel vaporizers.This piece of news has done nothing for Greenlane. The reality is that Greenlane's inventories are growing three times as fast as its sales, which suggests that its ties to cannabis are dubious at best. Uber (UBER)Source: NYCStock / Shutterstock.com In one of the most highly anticipated IPOs in several years, Uber (NYSE:UBER) went public in May at $45 a share, raising $8.1 billion in the process. As I write this, it is trading around $31 a share, 32% below its IPO price. Time to buy? Not by a long shot. Likely, Uber will never make money. In May, just before its IPO, I recommended that investors wait six months before buying its stock to see how it trades. Well, almost four months have passed and nothing good has happened to suggest now is the time to buy. In its first quarter as a public company, Uber reported a GAAP loss of $5.24 billion with about $3.9 billion due to share-based compensation. On a non-GAAP basis, the ride-hailing app's adjusted earnings before interest, taxes, debt and amortization (EBIDTA) loss in Q2 2019 was $656 million, 125% higher than a year earlier. Not quite as bad as $5.24 billion, but still a massive loss for a single quarter. That's especially true when you consider that Uber can do very little to ward off the competition."If I look down at my phone I've literally got six ride-hailing apps on there, and five bike-sharing apps, and drivers are the same -- they'll just go with whoever is busy or wherever they can get the peak pricing," said Aaron Shields, executive strategy director at FITCH, a retail brand consultancy. "The competitors on the market are taking advantage of switching costs -- they're dividing up a market and making it more saturated." * The 8 Worst Stocks to Buy Before the Trade Turmoil Cools Off Every time Uber and the rest of the ride-hailing apps does something to reduce costs, growth slows, which makes its business model a big loser. Levi Strauss (LEVI)Source: Davdeka / Shutterstock.com As of Sept. 3, Levi Strauss' (NYSE:LEVI) shares had lost 0.2% from its IPO price of $17. What makes this so egregious is that LEVI stock gained 32% in its first day of trading, which means it's lost $228 million of its market cap in the last five months. In March, before its IPO, I gave InvestorPlace readers seven reasons why they should steer clear of Levi's stock. It appears that I was right. One of my biggest concerns was the amount of debt it carried on its books. "Assuming Levi's goes out at a valuation of $5.78 billion, the company's long-term debt of $1.1 billion will be 19% of its market cap," I wrote on March 21. "That's not a massive amount by any means considering it's got more than $700 million on its balance sheet, but I can't help but wonder why it hasn't paid down its debt over the past four years."The other big concern I had about LEVI was its lack of significant growth in Asia. In the first six months of 2019, Levi's had Asian revenues of $474.4 million, 7.1% higher than a year earlier. That accounts for just 17% of its global revenue. Now, I get that it's an iconic U.S. brand, but there are plenty of American brands growing faster in Asia. I believe that the Haas family picked an ideal time to go public for a company whose best days may or may not be ahead of it. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 3 Artificial Intelligence Stocks to Buy * 7 Industrial Stocks to Buy for a Strong U.S. Economy * 3 Beaten-Down Bank Stocks to Buy and Hold for the Long Term The post 7 of the Worst IPO Stocks in 2019 appeared first on InvestorPlace.